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bija089 [108]
3 years ago
6

"Stock in Daenerys Industries has a beta of 0.73. The market risk premium is 10 percent, and T-bills are currently yielding 5 pe

rcent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 5.5 percent annual rate indefinitely. If the stock sells for $35 per share, what is your best estimate of the company's cost of equity? Use the average from CAPM and Dividend Growth Model calculations."
Business
1 answer:
ololo11 [35]3 years ago
8 0

Answer:

CAPM = 12.30%

Dividend Growth Model=  10.32%

Explanation:

According to the capital asset price model: Expected rate of return = risk free + beta x (market premium)

5% + (0.73 x 10%) = 12.30%

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

$35 = $1.6 x (1.055) / (r - 0.055)

r = 1.688 / 35 + 0.055 = 0.1032 = 10.32%

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Comprehensive resource management

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In Maddie's company, senior officers eat in the same cafeteria as the entry-level workers. On a trip to a different country, she
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Power distance

Explanation:

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3 years ago
You come across a scientific study reported in the New York Times. The study says that adults who played varsity sports in high
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There is no short answer.

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The treatment variable in this example, which is also the same as an independent variable, is whether the subject played varsity sports in high school or not which affects their chances of graduating from college with a bachelor's degree.

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3 0
3 years ago
The balance sheet data of Corinne Company at the end of 2025 and 2024 follow: 2025 2024 Cash $50 $70 Accounts receivable (net) 3
dezoksy [38]

Answer:

Corinne Company

Investing Activities Section of the Statement of Cash Flows:

Equipment sales         $12

Equipment bought   ($58)

Net cash used          ($46)

Explanation:

a) Data and Calculations:

Balance Sheet of Corinne company at the end of 2025 and 2024:

                                                 2025        2024

Cash                                           $50          $70

Accounts receivable (net)         320          270

Buildings and equipment         200           150

Accumulated depreciation

- buildings and equipment      (36)            (16)

Land                                          180              80

Totals                                      $714         $554

Accounts payable                  $180          $146

Notes payable- bank long term  0             80

Mortgage payable                     60               0

Common stock, $10 par           418            318

Retained earnings                     56              10

Totals                                      $714         $554

b) other information:

Land and Common Stock exchange

Equipment sold for $12 (cost $10 and book value $8)

Cash dividends $20

c) Equipment account

Beginning balance 150

Equipment sold        -8

Balance                   142

Closing balance    200

Purchase of new     58 (200 - 142)

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